Since he arrived in March this year following postings in Kabul and Kathmandu, Mr. Yang has met with opposition leaders, civil society groups, activists and government leaders. He’s also darted across the country to visit sizable Chinese projects. His embassy has also taken on a more active role in social media, engaging with Myanmar society through Facebook, hoping, he says, to clarify some misunderstandings about China’s activities in Myanmar and help the public to “develop a holistic” of relations between the two nations.

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These efforts are necessary. Though China once enjoyed an enviable position as Myanmar’s closest ally – one of the few it had when Western leaders slapped down sanctions its former military government – the country now finds its position increasingly precarious, as local communities grow cold towards Chinese projects. Chinese investment, too, has fallen dramatically since Myanmar began its transition away from military rule, just US$407 million in the fiscal year ending this March, compared to approximately US$12 billion between 2008 and 2011. [Related story, subscriber only.]

The Wall Street Journal spoke to Mr. Yang about China’s place in Myanmar’s transition towards democracy, falling investment from the economic giant and what he hopes for out of this crucial bilateral relationship. The following interview has been edited.

Chinese investments in Myanmar have fallen quite dramatically since Myanmar embarked along its democratic transformation. Why is investment falling? Do Chinese firms see Myanmar as a more risky place to invest in, because of protests against Chinese projects like the Myitsone dam and Letpadaung copper mine?

Fluctuation in investment is a normal phenomenon in a modern international economy, and even though the total investment volume fell, small and medium enterprises from China have taken the role of the main investor, engaging in more sectors like garment, telecommunication services and manufacturing. The difficulties, we believe, have only been in one main sector – energy and resources. These are isolated cases.

Avoiding risks the core objective for all investors, not only Chinese investors. The protests and resentment is not only for Chinese investments, but also for others. How the Myanmar government deals with those protests will determine investor’s confidence in the country.

But Chinese companies are not so experienced in dealing with the process of going overseas, and in communicating. The Myanmar people don’t know how these projects can benefit local people – we need to learn how to communicate.

Myanmar society has evolved. [The Myanmar] people’s expectations for the positive impact of these projects are also very high now. The government should play a role to communicate how these foreign investment projects can benefit these rural communities.

Has the experience of the Letpadaung copper mine – in which the project was met with protests, and had to suspend operations for almost a year now – scared away some Chinese companies, or made them rethink their Myanmar strategy?

The copper mine is a very symbolic issue, which happened during a time in which Myanmar undertook its political transition. The local villagers’ request for compensation, environmental and religious concerns mixed together and general a protest to [what we believe] is a normal economic project, guaranteed by a legal contract. Frankly speaking, Chinese enterprises had fewer experiences in dealing with such an issue, compared with their Western counterparts. It is a big challenge for them.

But with the support of Daw Aung San Suu Kyi and other stakeholders, this controversy has been settled through consultation. The new contract ensured the country will get more profits, and this can be a model for other foreign investments in Myanmar.

What are your hopes for the Myitsone dam project, the US$3.6 billion investment that has been halted since end 2011?

I understand that it was not an easy decision [to suspend the project]. We believe that the two sides should find a proper solution through negotiation, taking into account the interest and concern of all stakeholders.

Myanmar faces the tremendous task of development, I heard quite a few potential investors were discouraged by the unstable supply of power in Myanmar after their field trips here. There needs to be a comprehensive debate about the overall energy structure of the country [since] Myanmar’s huge energy potential has not been properly explored.

Political analysts see China’s strong ties with Myanmar waning, as more US, European and other regional companies and government chose to invest and engage with Myanmar. How do you view this changing political and diplomatic landscape, and how would you describe China-Myanmar relations now?

There might be competition, but it is positive – it does not mean that they are in, and we are out. In a globalized world, countries are becoming more interdependent and it is only natural for Myanmar to embark on reform, and develop relations with the whole world. Sustained development and prosperity for Myanmar is a positive thing for our bilateral relations.

China always supports Myanmar in choosing its own development method, based on its own circumstances, and believes that reform will provide more opportunities for bilateral relations. China and Myanmar are friendly neighbors, both sides have established a strong partnership. In this year alone, Myanmar president Thein Sein visited China two times and has visited China four times since taking office two years ago. This clearly displays the long-term friendship between our two countries.

I have no reason to be downcast about the prospect of our bilateral relations. The momentum is still strong.

What is China’s relationship with Myanmar’s opposition leaders, some of whom are less friendly towards the Chinese government, believing they supported Myanmar’s military leaders when they were in power?

China supports every political party and social organization that plays an active role in politics and makes its own contributions towards the development of this country in a legal way. We keep regular contact with Myanmar political parties and social organizations, including the National League for Democracy and the 88 Generation students group. During our contact with them, these groups always show support for the further development of bilateral relations, and hope that China will play a more active role in Myanmar.

We welcome all political parties and social organizations to visit China [since] this will promote mutual understanding of the two peoples.

Is China still worried about lingering tensions between ethnic minority groups in Myanmar, particularly in Kachin state which borders China?

China and Myanmar are linked by 2210 kilometers of border. Security and security serve in the interests of both countries.

With coordination by China and local parties, the Myanmar government and the Kachin Independence Organization have undertaken peace negotiations several times, which dramatically relieved conflicts in northern Myanmar and provided adequate circumstances for further peace talks. We sincerely hope that both sides can get a long-term peace through negotiation, and we are willing and ready to provide assistance in the peace process.

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